On Wednesday, the last day of eyefortranport’s 3PL Summit and Chief Supply Chain Officer Summit in Chicago, the day began with a panel on cutting edge technologies that could change the face of logistics. The panel included six people, but in the interest of brevity I’ll mainly focus on the comments of two participants: Ken Piro – the VP of Marketing at PINC Solutions – spoke on drone technology; Bruce Welty – Chairman of Locus Robotics – focused on goods-to-man robots.
PINC Solutions provides drones for use in yards and warehouses. Daimler is one of their clients. PINC’s traditional solutions include yard management systems that make use of RFID for real time location of yard assets. PINC’s relationship with Daimler involved providing a traditional yard solution to synchronize the inbound flow of goods to Daimler factories. But Daimler was looking for a solution for tracking finished vehicles, which are packed very tightly in large yards. In fact, with vehicles packed bumper to bumper, you could not read the vehicles RFID tags that were packed in the middle. Thus, was born their drone business. Drones can read vehicle IDs of Daimler cars or trucks in the middle of a line of vehicles.
For drones that will cross outside of property owned by a company, stringent regulations are still in place. Those regulations became a little less onerous this week when the Federal Aviation Administration released new guidelines. Nevertheless, using drones to fulfill orders would still be illegal, even if it was economically feasible; which many doubt. In contrast, PINC’s drones are used for asset location and for cycle counting inside warehouses.
Mr. Piro pointed out that when a full cycle count (i.e., checking to see that inventory the system says is located in certain slots is really there) is done, it can require 10-15 people and checking high slots can be difficult. PINC clearly believes automating this can have good payback as drones can find lost pallets and slots that are supposed by full that are currently empty.
Mr. Piro made it clear that when PINC has run pilots with drones in the warehouse for the purpose of cycle counting, safety is a priority. The drones either run at times when no one is working, or if the warehouses run 24 hours – workers are not permitted in the aisles where the drones are working.
A current limitation of using drones for cycle counting is that it really can’t see inventory stacked behind other inventory in a slot. This means it is great for one deep pallet racks, but cannot do the full cycle count in other types of slotting situations. However, when Mr. Piro was asked to look three to five years into the future, he foresaw much smaller drones, even drones the size of insects. Those smaller drones would be able to view a wider range of inventory in warehouses. There were probably those in the audience that found that somewhat unbelievable. As a recent viewer of the movie Eye in the Sky, which showed the U.S. military using just those kinds of drones for surveillance purposes, I found it quite plausible.
Mr. Welty also began by describing his company’s journey to producing robots for the warehouse. Mr. Welty used to run a warehouse management system company. After he sold the company, he founded a 3PL company that provides e-fulfillment services for their clients. That company sought to differentiate itself from others in the market by using robots in their picking process. They were one of Kiva’s early customers. However, when Amazon acquired Kiva, one of Mr. Welty’s chief competitors was now his supplier. That was the point where his company began to develop its own proprietary mobile warehouse robots. Those robots are now being sold by Locus Robotics as well as being used in their sister company’s – Quiet Logistics – warehouse operations.
Locus robots work well in warehouses with a wide variety of stock keeping units (SKUs) picked in eaches; in other words e-fulfillment warehouses. These floor level associates often walk 12 to 15 miles per day. With the robots, the pickers’ job is not only easier, but fewer of them are needed. What used to require 8 hours of work, can now be done in less than an hour.
Surrounding robots, the most interesting part of the panel’s discussion centered on ROI. There are highly automated warehouses with miles of conveyor, AS/RS, carrousels, and other forms of fixed location high speed automation. Panelists thought these types of investments often required five years to get payback. One 3PL participant said that their experience was that a 10 year payback period is more realistic. On the other side of the scale was manual operations with poor productivity, but which do not require expensive investments.
Robotics offers a form of automations that is flexible and scalable. You can purchase a limited number of robots, use them in one small portion of the warehouse, and if the experiment works, purchase more. If the experiment fails, well the company has not made infrastructure changes and they can always go back to manual picking. If the robots are needed in other locations, they can be packed on a truck and sent to those sites. They are not a static fixed asset.
In contrast, heavy automation, and even warehouse management systems (WMS), require big bang implementations where “you don’t know if it works until you turn it on.” As someone that used to implement WMS for 15 years, “I can tell you that first day” (when the system is turned on) is always scary.” Panelists knew of instances where companies had gone bankrupt because of failed automation or WMS projects.
So who should be using these new technologies? Mr. Welty clearly thinks there is minimal risk for companies with the right SKU profiles to try out robots. Mr. Piro made the point that 3PLs in particular should have innovation labs where they should be playing with a variety of technologies if they want to stay on the cutting edge.